711.60d2/10

Memorandum by the Assistant Chief of the Division of Eastern European Affairs (Packer)

Negotiations for a standard treaty of friendship, commerce and consular rights were initiated with Finland by the Department in 1923 and have been carried on intermittently since that date at Washington with the Minister of Finland. At the present time the negotiations are practically completed; there is substantial agreement between the two Governments on almost all the articles of the draft treaty. The Finnish Minister is at present in Finland where he is discussing with the Foreign Office the few points not yet agreed upon, and it is expected that the final draft of the treaty—acceptable to both the Department and to the Finnish Government—will be drawn up shortly after his return to Washington in the fall.

In view of recent developments with respect to commercial treaty provisions, the question arises whether the Department should complete the negotiations of the proposed treaty in its present form and [Page 137] submit it to the Senate for approval. EE5 is of the opinion that the negotiations should be completed and the treaty signed, if possible, in time for submission to the Senate next January. It bases its opinion on the following considerations:

The proposed treaty, which is a treaty of friendship, commerce and consular rights, is designed to establish a means for the development of American-Finnish economic and commercial relations on a permanent basis, and for the regulation of consular relations and other non-commercial relations between the two countries.

While a modus vivendi governs, apparently in a satisfactory manner, the commercial relations between Finland and the United States at the present time, it is, nevertheless, considered highly desirable that the commercial relations between the two countries be placed on a permanent treaty basis as soon as possible. A similar treaty with Poland has just gone into effect with that country (July of this year), and there is apparently nothing in this proposed treaty with Finland which is not in conformity with the present Administration’s commercial policy. Since substantial agreement has now been reached with respect to practically all of the provisions of the proposed treaty, it would be, in the opinion of EE, undesirable to allow the negotiations to lapse at this point, thus losing the results of negotiations which have extended over a ten-year period. While, in view of present world conditions, the Department is about to negotiate certain reciprocal agreements with several countries, it is believed that the principle of the most-favored-nation will still continue to be the long range of policy of this Government with respect to commercial treaties. Inasmuch as the proposed treaty is to provide the permanent basis of commercial relations between the United States and Finland, it is felt that it should be completed as soon as possible, particularly since there appears to be nothing in it which is not fully in accord with our present commercial policy. If it should be found desirable to enter into a reciprocal agreement with Finland covering certain commodities in the trade between the two countries, such an arrangement could be put into effect in the case of Finland in a subsidiary agreement in much the same manner as similar agreements are apparently to be negotiated with countries with which commercial treaty relations have already been established.

With respect to the consular and other non-commercial provisions of the treaty with Finland, it is desirable that a treaty basis be provided as soon as possible for the protection of American citizens and their interests in Finland. EE is strongly of the opinion that provisions of this nature should be concluded with all countries in the [Page 138] Eastern European area with which the United States maintains diplomatic relations. The United States now has such treaties with Estonia,6 Latvia,7 and Poland8 (including Danzig9). If this treaty with Finland is concluded and comes into force, Lithuania will be the only country in the Eastern European area of the category indicated that has not signed such a treaty with the United States.

The Department has announced (July 15) the desire of this Government to begin exploratory studies of the possibility of negotiating agreements with certain countries granting certain privileges and assurances with respect to the importation into the United States of various commodities on a reciprocal basis. While through the modus vivendi American-Finnish trade is on a most-favored-nation basis at the present time, EE is of the opinion that Finland should be given an opportunity to enter into a reciprocal agreement covering commodities which it exports to the United States. It is understood that Sweden desires to negotiate an agreement covering wood pulp imports into this country. While any concessions granted Sweden with respect to imports of wood pulp will automatically be extended to Finland (which is also a large exporter of wood pulp to the United States) under the most-favored-nation clause of the present modus vivendi, it is thought that this Government should notify the Finnish Government of its desire to negotiate such agreements and invite Finland to consider the opening of negotiations covering commodities in which it is particularly interested. EE’s recommendations in this matter are based on the following factors:

a.
Finland has always treated American commerce in an equitable manner despite the fact that, until Finland went off the gold standard, there was always an appreciable balance of trade in favor of the United States. The Finnish Government and people have been in recent years most favorably disposed towards the United States (no doubt due in part to the influence of the large number of persons of Finnish blood resident here), and the Finnish Government has given its acceptance of or support to various proposals of this Government with respect to disarmament, international peace, and international commercial measures tending to remove restrictions on trade.
b.
Finland is the only country which has met promptly the full obligations due to this Government in connection with intergovernmental indebtedness. In making the payment which fell due on June 15th, the Finnish Government not only broke the apparently united front of the debtor countries, but it also risked criticism from its political [Page 139] opponents in Finland. It would, consequently, be interpreted as constituting a gesture of appreciation, if this Government were to invite the Finnish Government to enter into negotiations for an agreement covering wood pulp or other commodities exported by Finland to the United States. In this connection, it is considered that news that the United States was negotiating with Sweden for special treatment for Swedish wood pulp, even though any privileges granted to Sweden would naturally be extended to Finland under the most-favored-nation provision of the modus vivendi, might be received in Finland as indicative of a tendency on the part of the United States to treat imports of Finnish origin less favorably than those of other countries. To create such an impression would be highly undesirable in view of present good relations existing between the two countries.

In summary, EE recommends that:

a.
The negotiations for the proposed treaty of friendship, commerce and consular rights with Finland be completed as soon as possible, with a view to submitting the treaty to the Senate in January.
b.
The Finnish Government be invited at once to initiate proposals for a reciprocal agreement covering imports into this country of those commodities which are of special interest to Finland.
c.
Any agreement entered into with Finland of the nature indicated in (b) above be made effective in the same manner as such agreements are to be made effective with those countries which already have a most-favored-nation treaty or modus vivendi with the United States.

E. L. P[acker]
  1. Division of Eastern European Affairs.
  2. Signed December 23, 1925, Foreign Relations, 1925, vol. ii, p. 70.
  3. Signed April 20, 1928, ibid., 1928, vol. iii, p. 208.
  4. Signed June 15, 1931, ibid., 1931, vol. ii, p. 938.
  5. See pp. 675 ff.